Judge tells AGs to get serious on settling Eli Lilly claims

John O'Brien Oct. 22, 2008, 5:59pm



NEW YORK (Legal Newsline) - A federal judge is curious why the 11 state attorneys general and the private attorneys they hired haven't already settled claims against pharmaceutical giant Eli Lilly & Co. and are waiting for much more money than the 33 attorneys general that did.

U.S. District Judge Jack Weinstein wrote on Tuesday that a settlement of remaining claims over the company's antipsychotic drug Zyprexa would be ideal and appointed a special master to oversee discussions.

"Every effort should be made to settle all pending cases brought by attorneys general which are before this court, and any other like cases in federal or state court," Weinstein wrote.

"It would be useful to settle all pending attorney general claims at the same time since the issues in each are much the same. Further delays will unnecessarily increase transactional costs.

"In view of the applicable statute of limitations, it is unlikely that any new cases can be brought successfully. A global settlement of all cases, including those pending in state courts, is desirable."

Eli Lilly paid $62 million to 32 states and the District of Columbia to resolve claims that the company marketed Zyprexa for off-label uses. The attorneys general also argued Zyprexa caused weight gain that resulted in diabetes in users, harming their respective states' Medicaid programs.

It was the largest consumer protection-based multi-state settlement with a pharmaceutical company, but 11 states chose not to participate.

Instead, the 11 attorneys general are asking for a total exceeding $1 billion, according to court documents.

"While most states have settled their cases against Lilly for a few million dollars each, the states with cases now pending in this court -- Connecticut, Louisiana, Mississippi, Montana, New Mexico and West Virginia -- are seeking, on essentially the same theories and evidence, many billions of dollars in damages in fines," Weinstein wrote.

Idaho's case is in the process of being transferred in with the federal court group. States with suits pending in state courts are Arkansas, Pennsylvania, South Carolina and Utah.

West Virginia Attorney General Darrell McGraw's suit against the company seeks an order for the company to pay three times the amount of benefits, payments or allowances paid under West Virginia's Medicaid program; unspecified equitable relief; a requirement that Lilly create a fund for the payment of costs of future medical care that will be paid by the state for injuries caused by the drug; civil penalties; interest; prejudgment interest and attorneys' fees.

Those attorneys are mostly outside counsel hired by the states to pursue the suits.

According to an entry of appearances at an Oct. 15 hearing conducted by U.S. Magistrate Judge Roanne Mann, only one of the six states in the federal court group sent a member of an attorney general's office.

That was New Mexico, for which Nan Erdman appeared. Also appearing for New Mexico was Bill Robins of Heard, Robins, Cloud & Lubel. He donated $10,000 to New Mexico Attorney General Gary King's campaign in 2006.

Other firms and lawyers representing attorneys general in the federal case include:

-Bailey Perrin Bailey of Houston, which donated $50,000 to Mississippi Attorney General Jim Hood in 2007;

-Morrow, Morrow, Ryan & Bassett of Opelousas, La., which donated $7,500 to Charles Foti from 2003-07, when he lost his bid for re-election, then donated $5,000 to now-Attorney General Buddy Caldwell;

-Kenneth DeJean of Lafayette, La., who donated $5,500 to Foti before giving $1,000 to Caldwell last year;

-Robert Salim of Natchitoches, La., who donated $1,000 to Caldwell last year;

-W. Howard Gunn and Associates of Aberdeen, Miss., which donated $2,500 to Hood before the 2007 election;

-William Quin of The Quin Firm in Jackson, Miss., who donated $3,000 to Hood while employed at Lundy & Davis in 2005; and

-Troy Giatras, whose political action committee Equal Justice gave $1,000 to McGraw in 2004.

Those attorneys, among others, will now be involved in the settlement proceedings ordered by Weinstein. He appointed Michael K. Rozen of The Feinberg Group to be the special master. Rozen previously helped negotiate asbestos settlements in the 1990s.

Weinstein also let stand a ruling by Mann that requires the states to provide medical records of Medicaid users during discovery. The records will be altered to keep the identities of the patients secret.

"Despite effective efforts by the magistrate judge to minimize discovery, the procedures that have been ordered will be expensive and burdensome," Weinstein wrote. "Moreover, there may be a burden imposed on health care providers, who already face significant stress.

"Nevertheless, the damages being sought are substantial, and plaintiffs must recognize their responsibility for discovery if they wish to prosecute their suits."

Weinstein stayed his own order on the medical records for 30 days to allow the parties to discuss the settlement.

From Legal Newsline: Reach John O'Brien by e-mail at john@legalnewsline.com. Campaign finance information from www.followthemoney.org.

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